Donor Logos for Congress

Donor Logos for Congress

What if Congress actually had to pay for any new program it
wanted to start? It's a common-sense way to do business. And
totally alien to Washington's breezy "spend now, find the money
later" zeitgeist.

But there may be some hope after all. Despite getting Congress
to pass trillions of dollars in new spending and debt since
Inauguration Day, President Obama has established a welcome new
principle for health care legislation.

He says it must be paid for. Not financed by borrowing today or
in the future.

Sounds good. Of course, this being Washington, there's some fine
print. Let's look at it closely so we know exactly what the Obama
principle of paid-for health reform really means.

According to budget chief Peter R. Orszag, the president "is
committed to the principle that health care reform must be deficit
neutral over the next decade."

First, notice the careful reference to paying for the "next
decade," not for the life of the program, which would be
permanent.

This 10-years-only test is one way Washington routinely hides
the long-term cost of a program. It simply ignores all downstream
(after 10 years) liabilities.

It's like those credit card offers in the mail. "ZERO interest
for 10 months!!!" Everything's fine until you hit month 11, and
suddenly you're having to pony up the 18 percent interest from
there on out. In Washington, it's a 10-year grace period. All costs
after that are, to use budgeting parlance, "outside the budget
window."

While congressional budgeteers may conveniently ignore such
costs, they are very real, and can be staggering.

Take the 2003 Medicare bill, which added a prescription-drug
benefit for seniors. Congress said the program would cost $400
billion. But that was just for 10 years. To get an idea of the
long-term cost - not voted on under the budget rules - we would
have had to put aside more than $8 trillion to pay the unfunded
future costs. That's on top of expected premium revenue.

Our children and grandchildren will be paying that.

Last month, Congressional Budget Office (CBO) bean counters
estimated the cost of Sen. Edward M. Kennedy's version of ObamaCare
at a stunning $1.3 trillion, with $1 trillion of that simply added
to the deficit. But as unusual, that's just for the first 10 years.
To pay for the permanent program upfront, we'd have to come up with
a whopping $8 trillion. Trillions more if we paid for it over
time.

So if Mr. Obama's principle of paid-for health care is to mean
anything, we must first change Washington's budget rules. Congress
and the administration must be required to show the true long-term
cost of their reforms, and explain how they propose to pay for
it.

Ironically, Congress requires larger private companies to
calculate and disclose their long-term employee health obligations
to stockholders. And it forces mortgage lenders to show you the
full financing cost - usually far more than the mortgage principal.
Lawmakers' reaction to living under their own rules? A deafening
silence.

But revealing the long-term cost is just half of what's needed
to honor a "pay-for" pledge. The other half is showing where the
money will come from and that it's guaranteed.

Mr. Obama says he'll raise $300 billion of the 10-year cost by
limiting tax relief for itemized deductions, especially gifts to
charities. The rest, he says, will come from more efficiency in
health spending, such as Medicare savings.

It may sound promising, but the CBO green eyeshades are
reluctant to count on "efficiency" savings. For good reason. Much
heralded cost-saving schemes in health routinely turn out to be
wishful thinking. In 1997, for instance, Congress declared there
would be budget savings from slowing the growth of physician
payments in Medicare. But that "saving" has been rolled back each
year under pressure from doctors.

So if new spending on health is to truly be paid for by savings
elsewhere in the system, here's an idea that any responsible
American would understand - bank the savings before you spend them.
For the president's health plan, that would mean that before
spending for each stage of the plan is authorized, the promised
savings to pay for it would first have to be achieved and
certified.

If Congress and Mr. Obama are serious about paying for health
care, and if they seriously think it can largely be paid for by
savings, they have nothing to lose by agreeing to a kitchen-table
style of saving money in a cookie jar before they spend it. But if
they won't do that, then make sure your children and grandchildren
get really high-paying jobs - because they will be stuck with the
tab.